Crude oil imports by BPCL may soar 50% to record next year

Crude oil imports by BPCL may soar 50% to record next year

New Delhi: Bharat Petroleum Corp. Ltd (BPCL) said its crude oil imports may rise 50% to a record next year after completing expansions to meet demand in the second fastest growing major economy.

Overseas purchases may climb to 24 million tonnes (mt) in the year starting 1 April, from 16mt this year, finance director S.K. Joshi said in an interview in Mumbai on Monday.

BPCL, India’s second largest state refiner, joins larger rival Indian Oil Corp. Ltd (IOC) in adding capacity at a time when recession has forced global firms, including Royal Dutch Shell Plc, to pare output and mothball units. BPCL sold 23% more fuel than it can process in the year ended 31 March, purchasing from competitors or overseas to bridge the gap.

“They would prefer to produce their own fuels rather than buy from others," said Hitesh Kuvelkar, an analyst with First Global Stockbroking Ltd in Mumbai. He has an “outperform" recommendation on BPCL’s stock. The share climbed 0.45% to Rs570.15 on the Bombay Stock Exchange on Tuesday and has gained 51.7% this year, against a 71% advance in the Sensex.

Of the 34 analysts tracked by Bloomberg who cover BPCL, 15 recommend buying the shares, seven advise holding the stock and 12 say “sell". IOC shares, which rose 1.43% to Rs645.80, are up 51.5% this year, and have been rated “buy" by 12 of the 28 analysts who track the refiner.

BPCL sold 27mt of fuels in the last fiscal year, compared with processing capacity of 22 mt, Joshi said.

The refiner plans to complete a six million-tonne-a-year plant in Madhya Pradesh, and add 2mt to a facility in southern India by December this year, said Joshi. That will boost the refiner’s annual capacity 36% to 30mt, he added.

Increased volumes may help BPCL address a decline in refining margins to about $3 (Rs146) a barrel from nearly $15 last year, Joshi said.

IOC is spending $12 billion on ventures, including building a refinery and expanding existing ones, chairman Sarthak Behuria told shareholders at a meeting on Monday.

India’s petrol sales climbed 10.1% in July after the economy grew 6.1% in the April-June quarter from a year earlier, government data shows.

BPCL’s new refinery at Bina in Madhya Pradesh will receive crude bought mostly from Saudi Arabia and Kuwait, the plant’s managing director U.N. Joshi had said on 13 August.

The company’s 12mt refinery in Mumbai processes sour and sweet crude in almost equal proportions, said Joshi.

Low-sulphur, or sweet crude oil, has less than 0.5% sulphur by weight. It is more expensive than sour crude that contains nearly 0.5% sulphur.